A compliance lawyer has warned advisers that the regulator will take increasingly stringent measures to ensure that the documentation behind financial advice is thorough and specific.

Speaking at the SMSF Association’s National Conference in Melbourne, Christina Kalantzis said advisers need to focus more on the back end of the advice process.

“It’s all about the paperwork,” said Kalantzis, a lawyer with Alexis Compliance and Risk Solutions. “I can assume everyone gives good advice; the evidence I’ve seen before me over the last 20 years tells me you all give good advice. It’s the paperwork behind it that worries me.”

Kalantzis used the interchange between ASIC deputy chairman Peter Kell and counsel assisting at the Hayne royal commission, Rowena Orr, to illustrate the resolve of the regulator.

“Nine out of ten pieces of self-managed super fund advice reviewed by ASIC did not meet best interest duties,” Kalantzis said. “How do you think that went on the front page of the newspaper?”

Kalantzis acknowledged that the regulator’s crackdown was pulling advisers away from their clients, where they add the most value.

“The amount of time you’re going to put into compliance now is out of control. Not the advice, not the strategies, not what you’re getting paid for, it’s the record keeping,” she lamented.

Kalantzis didn’t say that improving record keeping would be easy, either. “I should put up my hand and say my files are a little bit sub-standard too,” she said. “It’s very hard to keep good paperwork.”

Nevertheless, Kalantzis continued, ASIC has made its intentions clear. If advice documentation isn’t up to scratch, she explained, advisers can expect to be effectively locked out of business.

“This is what ASIC will write,” Kalantzis said. “You’ll get a little letter saying they’ve viewed your SoAs, and they’ll say ‘By reason of the following matters it appears that you may not have the ability, professional skills and knowledge to competently provide financial services’. In short, that means banning.”

She implored advisers to be more specific, and include more details in their statements and records of advice.

“I don’t want to see general comments saying ‘superannuation advice’. Don’t really care. I want you to tailor it to them,” she explained. “They want to go on a holiday? Big deal. They want to go around Australia for 12 months and spend $50,000… I want to hear what they said, in their own words.”


Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
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